ZAR
The South African rand spent the better part of the Asian session trading on the back foot on Tuesday, as the dollar was broadly trading stronger. Although intraday activities, along with the opening of the American session saw the rand better bid against the greenback, retracing all the day’s losses to end the session firm. The local unit initially rose to a high of R15.1175/$ before retracting its losses to reach a low of R14.9250/$, and finally closing the day at R14.9400/$.
The rand continues to carry the burden of Africa’s most industrialized economy daily, with the country’s economic backdrop posing a serious threat against the rand’s market resilience. The rand has long benefited from global markets positioning for a speedy economic recovery on the back of the expected $1.9 trillion US stimulus and successful vaccination programs around the world. Although rising US yields and concerns over inflation crushed the party for the local unit and other EM’s.
Locally we have no significant data for today, as such the local unit will most likely continue to take its cue from international data and other market-moving events.
International
The dollar retreated yesterday as US bond yields came off from recent highs amid concerns that too high yields could undermine financial stability and the current recovery path, supporting dollar weakness as the safe-haven currency lost its allure and global risk appetite picked up again. The dollar index traded a low 90.726 just before ending the session at 90.762.
The pound continued to trade lower in the first half of the session as the market still favoured the dollar, but managed to bounce off lows to almost trade flat towards session end as Finance Minister Rishi Sunak pledged to protect the UK economy from pandemic ramifications. The pound weakened to $1.3858, then strengthened to $1.3975, and ended the session at $1.3966.
Similar to the pound, the euro was weaker in the first half, but rebounded in the second half as risk appetite picked up on the back of a weaker dollar. Despite marginal gains, the euro is not out of the woods as next week’s ECB meeting is yet to give clarity on the Eurozone’s plans to address the issue of high borrowing costs due to higher yields. The single currency weakened to $1.1991, then strengthened to $1.2093, and ended the session at $1.2088.
This communication (“this communication”) has been provided by the corporate and investment banking division of Absa Bank Limited a registered bank in the Republic of South Africa, a subsidiary of Absa Group Limited, with company registration number: 1986/004794/06 and with its registered office at: Absa Towers East, 3rd Floor, 170 Main Street, Absa Towers West, 15 Troye Street, Johannesburg 2001, Republic of South Africa (“Absa”). Absa is regulated by the South African Reserve Bank. Absa has provided this communication for information purposes only and you must not regard this as a prospectus for any security or financial product or transaction. This communication is from an Absa Sales and/or Trading desk and is not a product of the Absa Research department. This communication has not been produced, reviewed or approved by the Absa Research Department, and is not subject to any prohibition on dealing ahead of the dissemination of research. The views in this communication are not a personal recommendation and do not take into account whether any product or transaction is suitable for any particular investor. This message is subject to the terms and conditions at: http://www.absa.co.za/disclaimer. This communication is confidential and no part of it may be reproduced, distributed or transmitted without the prior written permission of Absa.
Contact Details
Tel: +27 (0)21 180 4295/6/7
Cell: +27 (0)79 014 4676
Fax: +27 (0)21 930 5493
Email: info@pgforex.co.za
Address:
P.O. Box 6550 | Parow East
Cape Town | South Africa
7501
Company Registration Number: 2002/031454/07